Bridgewater Bancshares, Inc._2023 Annual Report

customer service fees, bank-owned life insurance income and FHLB prepayment income, offset partially by lower swap fees and other income. 2022 Compared to 2021 Noninterest income was $6.3 million for the year ended December 31, 2022, compared to $5.3 million for the year ended December 31, 2021, an increase of $1.0 million, or 19.3%. The increase was primarily due to increases in customer service fees, swap fees, bank-owned life insurance income and other income, offset partially by lower gains on sales of securities. The following table presents the major components of noninterest income for the year ended December 31, 2023, compared to the year ended December 31, 2022, and for the year ended December 31, 2022, compared to the year ended December 31, 2021: Noninterest Income: CustomerServiceFees........................... $1,455 $1,236 $ 219 $1,236 $1,007 $ 229 Net Gain (Loss) on Sales of Securities .............. (33) 82 (115) 82 750 (668) LetterofCreditFees............................. 1,746 1,592 154 1,592 1,676 (84) Debit Card Interchange Fees ...................... 595 586 9 586 563 23 Swap Fees ..................................... — 557 (557) 557 — 557 Bank-Owned Life Insurance ...................... 992 762 230 762 316 446 FHLBPrepaymentIncome........................ 792 — 792 — — — OtherIncome................................... 946 1,517 (571) 1,517 997 520 Totals........................................ $6,493 $6,332 $ 161 $6,332 $5,309 $ 1,023 Noninterest Expense 2023 Compared to 2022 Noninterest expense totaled $59.3 million for the year ended December 31, 2023, a $2.7 million, or 4.8%, increase from $56.6 million for the year ended December 31, 2022. The increase was primarily driven by a $2.3 million increase in the FDIC insurance assessment as the result of industry-wide increases, a $1.2 million increase in derivative collateral fees, and a $417,000 increase in professional and consulting fees, offset partially by decreases in salaries and employee benefits, marketing and advertising expenses, and the amortization of tax credit investments due to the early adoption of ASU 2023-02. The Company early adopted ASU 2023-02 applying the modified retrospective method which reclassified noninterest expense to income tax expense effective January 1, 2023, impacting comparability to prior years. The Company had 255 full-time equivalent employees at December 31, 2023, compared to 246 employees at December 31, 2022. Efficiency Ratio. The efficiency ratio, a non-GAAP financial measure, reports total noninterest expense, less amortization of intangible assets, as a percentage of net interest income plus total noninterest income less gains (losses) on sales of securities. Management believes this non-GAAP financial measure provides a meaningful comparison of operational performance and facilitates investors’ assessments of business performance and trends in comparison to peers in the banking industry. The efficiency ratio was 53.0% for the year ended December 31, 2023, compared to 41.5% for the year ended December 31, 2022. The efficiencies of the Company's “branch-light” model have positioned the Company well to continue navigating a challenging environment of a more spread-based revenue model. Year Ended December 31, Year Ended December 31, Increase/ (Decrease) Increase/ (Decrease) (dollars in thousands) 2023 2022 2022 2021

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